The recent bestsellers The Sheepover, The Christmas Wish, and the older Stranger in the Woods use photos/photo illustrations. Interestingly, the Sheepover and SITW both were originally self-published, with The Sheepover getting picked up by Little Brown after it became popular. This might suggest that readers like photos more than art directors do. I tried but failed to find a post last year (Nerdy Book Club? Mr. Schu?) with new picture books using photos, but I remember that most of the photos were of constructions, like Terry Border's Peanut Butter and Cupcake or Marcel the Shell. I remember one had photos of little fabric birds and one had photos of gorgeous cut paper creations -- maybe someone else can supply the titles.